Aggressive late buying helps DFM close in green

The Dubai index could move one of three ways today after a baffling trading session on Tuesday.

This saw aggressive late buying help the Dubai Financial Market General Index close in the green, but Abu Dhabi fell for the second day running.

The DFMGI climbed 0.65 per cent to 5,752 points thanks to a sudden burst of activity in a host of stocks including Emaar, DFM Company and Dubai Investments.

Overall, volumes fell again with just 135 million shares worth a combined Dh820 million changing hands. This is less than a third of the total of a week ago.

Trading slumped for two main reasons, although both of these are about to expire.

The first is today's deadline for subscription to Dubai Investments' Dh800m rights issue. This is open to the company's existing shareholders and those needing to cash in other shares to fund their application would realistically have to had completed this by the end of yesterday to make it in time.

The second reason is the closing of leverage positions by brokerages ahead of the end of the month, but this too may now be completed.

"The late surge was pure speculation in the hope the market might rally today and so some traders wanted to buy early," said Ayman El Saheb, Darahem Financial Brokerage director of operations.

"There are mixed signals from the market and today it could simply close flat. Alternatively, there could be a sharp decline.

"A lot of shares were able to hold their ground under selling pressure and the big question is whether they will be able to sustain this today.

"The third option is that we will see strong buying to push the market into a rally."

Saheb said he believed the first or third scenarios were the most likely, with a market slump the least probable.

Dubai trading followed a curious pattern, jumping 40 points early on, only to see these gains wiped out to slip into negative territory around the mid-session mark. It then mounted a recovery before falling away again, yet was saved by a 45-point surge in the final 10 minutes.

Three of the four most active DFM stocks fell. Air Arabia was the exception, rising 0.5 per cent, but top trader, Emaar Properties, lost 0.86 per cent to move in a different direction to the general index for the first time since April 16. Predictions that Emaar was consolidating at new higher levels now seem premature, with the firm falling 3.36 per cent since Sunday.

The DFM Company retreated from Sunday's eight-week high, falling 0.83 per cent to Dh5.96, while Dubai Investments added 1.16 per cent.

Emirates NBD was the most conspicuous gainer, surging 4.21 per cent to Dh12.35, its best highest since March 10.

Dubai Islamic Insurance continues to prosper ahead of its likely stock split. This time is jumped 3.06 per cent to Dh31.95, its best close since early November.

Meanwhile, Darahem's Saheb believes the Dubai bourse is set for further gains in

May after volumes returned in the second half of April to help banish the blues of the March slump.

Most analysts echo his views and a probable uptrend will no doubt be spurred by the DFM's London roadshow in late May, although this may be more down to the action of local speculators and less the result of foreign funds suddenly entering the market.

ADSM turnover

Abu Dhabi's turnover eclipsed Dubai's for the second day running, but this could not stop the capital's bourse from dropping 0.14 per cent to 4,991 points. The 5,000-mark is proving a stubborn hurdle as gains in four of the five most active stocks on the ADSM failed to drag it higher.

Arkan was again top of the volume and value charts and this helped it to rise 0.63 per cent, while Aldar Properties and Union Insurance added 1.3 and 9.68 per cent respectively.

Sorouh Real Estate, one of the ADSM's stars of 2008, fell 0.31 per cent to Dh9.61 and is now 13 per cent below early March's all time high of Dh11.

Depa continues slide

Improving volumes could not save Depa from its fifth successive fall yesterday.

The interiors contractor has yet to close in the green since listing on the Dubai International Finance Exchange a week ago and yesterday it fell 2.84 per cent to $1.37. This close puts it 11.6 per cent below its initial public offer price of $1.55, although yesterday's volume of 5.6 million shares was up 80 per cent on the day before. DP World also declined, this time falling 0.95 per cent to $1.04 after 6.2m shares were traded.

Each Depa trade was worth an average of $36,896, while DP World's mean transaction value was nearly three times this figure at $99,076.

Bullish outlook for gulf markets

Strong economic activity, high growth and attractive valuations will enable the Gulf stock markets to outperform their counterparts in other emerging markets, according to Eric Swats, Rasmala Investments head of asset management. He is especially bullish about Qatar and Kuwait, but warns the UAE and Saudi Arabia may lag behind in comparison.

The Dubai and Saudi endured a mega slump in the first three months of 2008, along with leading global exchanges, but Swats believes any significant correlation was brief and largely coincidental.

Swats said: "Saudi was the worst performing market in the Gulf in the first quarter, yet it's also the most difficult for foreign funds to access, while Kuwait, Qatar and Oman all delivered healthy returns over the same period.

"So a temporary, strengthening correlation should not be taken out of context from the longer term pattern, which is of a minor, positive link between Gulf and global markets." He predicts the likely strong performance of the Gulf exchanges this year will attract more foreign funds, but describes current ownership restrictions as "onerous"' and warns these may limit gains.

"Rules are being relaxed, but it's not something that will happen overnight," said Swats. "Allowing or increasing foreign ownership typically is a catalyst for a rise in a company's share price and more firms are likely to alter their rules as they become more integrated into the global economy," he added.